It was seven months ago that Google, in a full publicity push, announced its Google Wallet -- a tie-up with Sprint, Samsung, and Citibank that augured the end of leather wallets and paper cash.
Or did it?
This morning I bought my newspaper and a coffee with crumpled dollar bills, same as I have for going on a half century. And you know what? I am swiftly becoming a digital wallet skeptic. Maybe, just maybe, it won’t happen in my lifetime.
I did not say that a dozen years ago, when I wrote a gushing magazine piece about how cellphone users in Finland could buy Cokes and candies from vending machines with a wave of a phone. The charges appeared on the buyer’s monthly cellphone bill. In Helsinki, it worked beautifully. (Sorry, link to story not available.)
One thing nagged at me in reporting that story: In interviews, the two major US card issuers, Mastercard and Visa, both expressed interest in the pilots, but neither seemed inclined to believe the technique was coming to the US anytime soon. Merchants weren’t equipped to process such charges; consumers did not understand them; and -- probably the zinger -- nobody was eager to cut carriers in for a slice of the retail action.
Fast forward to today. Near Field Communication (NFC) has replaced Bluetooth and RFID as the linking technology of choice, widely viewed as more secure, reliable, and easy to use. And it’s at the heart of the Google Wallet in the Nexus phone.
Except I don’t own one. And I don’t know anybody who does.
One reason: The concept of a digital wallet is built on a lie. Patrick Gray, president of Charlotte, N.C.-based consulting group Prevoyance, explains: “The argument is you could just carry a phone. Except a phone cannot replace your wallet.” Gray pointed to a driver’s license, or other government-issued ID card, as a must-carry. And nobody in the US is even talking about a digital ID card -- meaning we are stuck with wallets no matter what.
Veteran banker Mike Arman was more dismissive in an email to me: “Digital wallets are stalled because: They aren't convenient. They aren't secure. They don't work very well. They are not accepted everywhere. Plain old cash solves ALL these problems -- cash spends anywhere.”
Try to use a digital wallet -- anything from the Google Wallet to innovative payments tools such as Dwolla and LevelUp -- and it just cannot be guaranteed that you can in fact buy that newspaper and cup of coffee or anything else. For one thing, merchant acceptance is dragging. (LevelUp clams 266 merchants in Boston, a metro center that must have 100,000 merchants or more.)
“A digital wallet is a nice-to-have -- not a must-have,” says Atlanta-based business consultant David Nour. He is not ruling out that someday digital wallets may become must-haves. After all, cellphones, in just the space of a half dozen years, leapt from “nice” to “must.” A boost could come, he says, “if a major ecosystem player really embraced it...”
Cue images of Apple.
In the run-up to last fall’s launch of what turned out to be iPhone 4S (not the iPhone 5 that had been expected), there was huge disappointment in some quarters that the phone did not feature NFC, as had been buzzed about for months. Why? A common belief is that Apple concluded NFC wasn’t worth the hit on battery life, but there is no proof that was the case. All we know is it wasn’t there.
If Apple in fact builds a digital wallet into the next iPhone -- possibly a much-rumored payments tool linked to iTunes -- sign me up. I will buy it on Day 1, and so will millions of us. And the digital wallet will become reality.
But not until Apple says so. In my view, nothing short of a Cupertino kiss will turn this frog into a prince.
Robert, I think most of the people just do not notice how world has changed in terms of "digital wallets". I think we have already had them- I am talking about credit and debit cards- I remember this interesting feeling- when I lived in Berkeley and left for San Francisko to have a cup of coffee with my friend- I could have no cash- so I needed no wallet- I had one debit card and I could buy a ticket for Bart and payed for coffee. Then, when I came to Russia I felt really sad, that I had to carry my wallet and much cash again, but today- I am visiting my friend right now in a different city and you know what- I took not so much cash- because I have a card and there are plenty ATM machines everywhere as well as I can pay by card in most of the places in a big city- so today when we go for a walk I won't take my wallet- I 'll have only my card-this can be called a digital wallet, can't it?
I don't want to have to deal with digital wallet outlets that only accept Apple phones, or only work on the T-Mobile network, or whatever. I'll wait until they develop a standard that all the handset vendors and networks agree to use, so that any device works anywhere, and then I'll think about it.
I'm not sure I agree that Apple is the missing link here, but it sure looks that way. I don't think Google is the one to get the party started.
First, what I've never understood is, why don't the carriers get into this game? It's one thing to be a conduit to Mastercard and Visa, but why involve them at all?
The phone carriers already have a billing mechanism. Why not turn "Sprint the carrier" into "Sprint the carrier card company"?
It would be the same reasoning that saw Sears make more from its credit card business than from its stores.
Assuming that won't happen, and I stress that it should, the major card issuers are in control here, so that's rollout delay number one.
Second, I submit that most users of Google phones are not loyal to Google. They have an Android "because," not, "because it is better than Apple." I know there are some geeks who feel that way, but generally Android isnt a phone people get because it does so much more than an iPhone. They get it because it's cheaper than an iPhone.
Therefore, I don't think it will get traction unless Apple thinks its important for the iPhone. Why would it be good for the iPhone?
I could see why it would be good for merchants and for the credit card issuers, but why Apple?
If I were Apple, I'd yawn. The alternative is to work with the credit card issuers on their terms (there are no other) and Apple works only to Apple's terms.
And, to that end, if Google thinks it is important (as has been demonstrated) and will benefit, that's reason #1 for Apple to not be interested.
It seems that early optimism about this in the US gets clouded by the fact that we are a very large geographic area with dissimilar development in infrastructure compared to small compact countries in Europe, for example.
If we had the same infrastructure, perhaps it would be much easier to accomplish?
Or would NFC simply mean that the soda machines would have to be able to connect to the phone? (And an internet connection)
Seems to be likely that the need for this is not prevalent enough here yet to warrant the development of the actual structural components to make this a reality.
I agree with your comments Chris. At this point, using a "digital wallet" is more complicated than using a credit card. As long as that's the case, there's no chance for digital wallets to emerge.
Right-o, Mary. I am less enthused by the idea of a "digital wallet" since that incident. It's not convenient to have all of these capabilities on a phone if taking the phone out in public isn't safe. But, even that aside, losing these devices or having them stolen becomes more and more of a risk if they're also our digital wallets, and essentially repositories for all of our data.
To me the need is mother of invention. As long as people are satisfied with debit/credit cards and hard cash, the developers might not look into it seriously. May be to Apple, battery life was not an issue, it was an excuse as it couldnt say 'we have no interest in this development'. That may make people remember the statement when the digital wallet goes mainstream for Apple. Google and Apple no matter how hard they try to build a convenient system, they also need to take on board retailers and industry to make its use widespread and convince people that it is better than a debit/credit card.
Agreed, Chris. Further, I am nervous enough about banking etc. online to think twice about waving my phone around to pay for things. Not only is there the issue of insecure wireless; Nicole got her phone stolen out in the open in broad daylight.
Strange thing is, no one ever complained about carrying a wallet before the cell phone became a must have accessory. Swipe a cell phone or a credit card, I don't see the great need for the digital wallet, especially since we can't get rid of the traditional wallet in the first place.
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